Ly Corporation · TSE:4689
Ly — Z Holdings — FY2022 Q3 Earnings Presentation
55 slides from Ly's earnings presentation, Feb 2, 2023
Slide 1: FY2022 Q3 Appendix
Security Code: 4689 Z Holdings Corporation Business Results FY2022 Q3 Appendix February 2, 2023
Slide 2: FY2022 Q3 Consolidated Business Results
FY2022 Q3 Consolidated Business Results
Slide 3: FY2022 Q3 Consolidated Business Results Whole Group
FY2022 Q3 Consolidated Business Results Whole Group • Consolidated PayPay in Q3. Recorded highest quarterly revenue despite continued challenging macro environment. • Decrease in adjusted EBITDA due to changes in market conditions and impact of PayPay consolidation, despite cost optimization and sel
Slide 4: FY2022 Q3 Factors of Change in Operating Income
FY2022 Q3 Factors of Change in Operating Income Whole Group (JPY B) FY2022 Q3 YoY Difference YoY Major Factors of Change1 (JPY B) • PayPay +33.3 • ZOZO +5.1 Revenue 453.6 +44.5 +10.9% • LINE +7.9 • ASKUL Group +4.8 • LINE +4.5 • eBOOK Initiative Japan Cost of sales 132.1 +5.7 +4.6% -4.4 • ASKUL Grou
Slide 5: FY2022 Q3 Factors of Change in Net Income Attributable to Owners of the Parent
FY2022 Q3 Factors of Change in Net Income Attributable to Owners of the Parent Whole Group (JPY B) FY2022 Q3 YoY Difference YoY Major Factors of Change (JPY B) Operating income 190.7 +129.7 +212.5% Other non-operating income 0.8 -3.7 -82.1% Other non-operating expenses 11.6 +8.9 +339.9% • PayPay +4.
Slide 6: FY2022 Q3 Equity in Losses of Associates and Joint Ventures
FY2022 Q3 Equity in Losses of Associates and Joint Ventures Whole Group • Equity in losses of associates and joint ventures improving due to progress in monetization of businesses and cost optimization. Equity in Losses of Associates and Joint Ventures Major Equity- Equity Based in Business Method A
Slide 7: Business Status of Equity-Method Affiliates
Business Status of Equity-Method Affiliates Whole Group • Many of the equity-method affiliates are moving into a monetizing phase from FY2023. • Aim to turn LINE’s international/financial businesses profitable in around FY2023-FY2025. (Consolidated in October 2022) (Taiwan) (Thailand) (Indonesia) •
Slide 8: Adjusted EBITDA – Breakdown of Adjustment Items
Adjusted EBITDA2 – Breakdown of Adjustment Items Whole Group (JPY B) Stock Loss on compensation Other Adjusted EBITDA2 Depreciation retirement of Impairment expenses -144.1 & amortization fixed assets 1 losses Op. income ＋ depreciation & amortization1 ± EBITDA +0.3 +2.4 +3.8 adjustment items 190.7 E
Slide 9: Recording of Gain on Remeasurement Relating to Business Combinations Due to Consolidation of PayPay
Recording of Gain on Remeasurement Relating to Business Combinations Due to Consolidation of PayPay Corporation Whole Group • In FY2022 Q3, recorded a gain on remeasurement relating to business combinations of JPY147.3 B (EBITDA adjustment item). Gain on Remeasurement Relating to Business Combinatio
Slide 10: Impact from Consolidation of Subsidiaries (PPA)
Impact from Consolidation of Subsidiaries (PPA) Whole Group LINE ZOZO PayPay Annual Annual Annual Amortization Amortization Amortization Amount Amortization Amount Amortization Amount Amortization Item Period Item Period Item Period (Straight (JPY B) Amount (JPY B) Amount (JPY B) Amount (Straight Li
Slide 11: FY2022 Q3 Consolidated Statement of Financial Position
FY2022 Q3 Consolidated Statement of Financial Position Whole Group (JPY B) FY2022 Q2 FY2022 Q3 Difference Assets 7,514.7 8,573.8 +1,059.1 Cash and cash equivalents 1,359.0 1,860.2 +501.2 Trade and other receivables 342.9 653.3 +310.3 Loans in credit card business 475.2 569.5 +94.3 Investment securit
Slide 12: Financial Index: CAPEX and Net Cash Flow
Financial Index Whole Group CAPEX1 Net Cash Flow (Excludes Financial Business2/Financial Business)1 (JPY B) (JPY B) Net Cash Flow Net Cash Flow 68.3 (Excluding Financial Business) (Financial Business) Impact of PayPay 15.8 consolidation4 Consolidated - 53.7 dividend 48.2 Changes in + 63.6 Investing
Slide 13: Financial Index: Interest-Bearing Debt and Net Leverage Ratio
Financial Index Whole Group Interest-Bearing Debt & Net Interest-Bearing Debt1 Net Leverage Ratio3 (Excludes financial business2) (Excludes financial business2) 10,000 (JPY B) (JPY B) 3.00 1,471.5 1,451.5 1,418.2 1,358.2 1,341.3 185.2 8,000 187.7 201.7 2.66x 2.49x 2.50 169.2 167.6 2.48x 2.18x 2.21x
Slide 14: FY2022 Cost Synergies
FY2022 Cost Synergies Whole Group • In FY2022, pursue approx. JPY14.0 B cost synergies1 through optimization of outsourced development and joint purchase, etc. Cost Synergies1 Further Cost Reduction New Cost Synergy Areas (JPY B) in FY2021 Cost Synergy Areas in FY2022 Approx. 14.0 Consolidation of o
Slide 15: FY2022 Q3 Consolidated Business Results: LINE
｜ FY2022 Q3 Consolidated Business Results1, 2 LINE • Revenue increased due to the consolidation of LINE MUSIC, etc. Operating income decreased due to decrease in revenue of display ads, etc. Revenue (YoY) Operating Income (JPY B) (JPY B) 90.2 10.3 (+9.7%) 82.2 81.3 81.5 79.9 (+17.3%) (+15.5%) (+10.0
Slide 16: Change in Reporting Segments
Change in Reporting Segments Whole Group • From FY2021, introduced three new business segments: Media, Commerce, and Strategic by classifying businesses according to the growth phase of each business. FY2020 FY2021 Q1 – Commerce Media/Advertising, Search, Marketing Solution, Vertical Media Business
Slide 17: Media Business
Media Business
Slide 18: Group Total Advertising Revenue
Group Total Advertising Revenue Media Business Group Total Advertising Revenue1 Group Total Advertising Revenue – YoY Growth Rate1 (JPY B) 153.4 154.7 151.5 145.1 Group Total Advertising Revenue: 143.0 YoY -1.2% 49.0 +21.3% 51.0 51.0 48.8 48.6 +17.7% +14.3% +9.6% +8.6% +5.3% +4.0% 102.4 105.7 100.5
Slide 19: Business Results (P/L): Media Business
Business Results (P/L): Media Business Media Business (JPY Million) FY2021 Q31 FY2022 Q31 YoY Revenue 167,574 165,640 -1.2% LINE Advertising revenue 51,047 51,042 -0.0% Display advertising 29,360 26,660 -9.2% Account advertising 20,139 22,898 +13.7% Other LINE advertising 1,547 1,482 -4.2% Yahoo Jap
Slide 20: Major Services and Products of Media Business Segment
Major Services and Products of Media Business Segment Media Business Item Breakdown LINE Ads Display ads LINE VOOM, LINE NEWS, Chat List, Talk Head View, Talk Head View Custom, etc. Account ads LINE Official Account, LINE Promotion Sticker, LINE de Obo, LINE Flyer, etc. Other ads LINE Part Time Jobs
Slide 21: Advertising Products
｜ Advertising Products Media Business Item Fee Calculation Placement Pages/Product Outline Type of Advertiser Display ads Cost per-click LINE VOOM LINE VOOM tab Major corporations/SMBs Cost per-view Cost per-click LINE NEWS NEWS tab Major corporations/SMBs Cost per-view Cost per-click Chat List Top
Slide 22: Advertising Products
｜ Advertising Products Media Business Item Fee Calculation Placement Pages Type of Advertiser Search advertising Cost per-click Search results pages Major corporations/SMBs Display advertising Programmatic Yahoo! JAPAN Ads Top page Cost per-click “Display advertising” Interior pages of service sites
Slide 23: Commerce Business
Commerce Business
Slide 24: Yahoo! JAPAN Mart by ASKUL
Mart ｜ Yahoo! JAPAN Mart by ASKUL Commerce Business • Rebranded to “Yahoo! JAPAN Mart by ASKUL” for full launch. Number of stores increased to 22. • Planning to establish a system that can serve all 23 wards of Tokyo within FY2022. Item Status Next Steps Delivery Bases (Tokyo’s 23 wards)1 Speedily e
Slide 25: Business Results (P/L): Commerce Business
Business Results (P/L): Commerce Business Commerce Business (JPY Million) FY2021 Q31 FY2022 Q31 YoY Revenue 213,706 222,659 +4.2% Merchandise EC 174,266 180,748 +3.7% Shopping business 87,380 87,683 +0.3% Reuse business 15,130 15,427 +2.0% ASKUL online BtoB business 71,755 77,638 +8.2% Services EC 5
Slide 26: Main Service Platforms of Shopping Business
Main Service Platforms of Shopping Business Commerce Business Existing E-commerce Quick Commerce Social Commerce Shopping Mart (Renewed in October 2022) Mall-type Direct sales Direct sales Immediate delivery Mall-type E-commerce store (Approx. 600 mil. items) (Approx. 900,000 (No. of items service (
Slide 27: Major Services and Products of Commerce Business Segment
Major Services and Products of Commerce Business Segment Commerce Business Item Breakdown Merchandise EC - Yahoo! JAPAN Shopping, ZOZOTOWN, LOHACO, Charm, LINE SHOPPING, Shopping business LINE FRIENDS, LINE GIFT, MySmartStore, Yahoo! JAPAN Mart by ASKUL, LIVEBUY, Overseas EC1 Reuse business YAHUOKU!
Slide 28: KPI - Definition of EC Transaction Value
KPI - Definition of EC Transaction Value Commerce Business Item Major Services/products EC transaction value - Domestic merchandise - Yahoo! JAPAN Shopping, ZOZOTOWN, LOHACO, Charm, LINE SHOPPING, LINE GIFT, LINE Shopping business FRIENDS, MySmartStore, Yahoo! JAPAN Mart by ASKUL, LIVEBUY Reuse busi
Slide 29: Strategic Business
Strategic Business
Slide 30: Major KPIs of PayPay
｜ Major KPIs of PayPay Strategic Business Registered Users1・MTU2 No. of PayPay Payments3 No. of PayPay Merchants4 (Million) (B) (Million) 54.00 1.368 3.98 51.21 3.87 1.267 3.66 3.74 48.65 3.55 46.79 44.55 1.113 1.005 0.967 28.19 25.16 22.53 M T U YoY +41.5% YoY +12.0% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q
Slide 31: Major KPIs of PayPay Card
｜ Major KPIs of PayPay Card Strategic Business Active Cardholders1 Transaction Volume1 Revolving Balance1 (Million) (JPY B) (JPY B) 9.58 976.4 230.0 9.05 8.68 8.31 202.9 841.6 842.7 7.89 192.8 772.7 773.2 184.7 176.8 YoY +21.4% YoY +26.4% YoY +30.1% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'21 Q4'21 Q1'22 Q2
Slide 32: Major KPIs of PayPay Bank
｜ Major KPIs of PayPay Bank Strategic Business No. of Accounts Deposit Balance Loan Balance (Million) (JPY B) (JPY B) 6.68 1,585.2 503.9 511.8 6.42 1,539.5 1,517.9 486.0 6.22 1,461.7 6.02 1,443.4 5.81 416.7 321.0 YoY +15.0% YoY +9.8% YoY +59.4% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'21 Q4'21 Q1'22 Q2'22 Q
Slide 33: Capital Structure (Shareholding Ratio)
｜ Capital Structure (Shareholding Ratio) Strategic Business • Consolidated PayPay Corporation in October 2022. May 2018 As of end of As of end of As of end of As of end of Capital Structure after Completion of Transactions4,5 (At founding) May 2019 Mar 2020 Mar 2022 Sep 2022 (October 2022 –) Yahoo J
Slide 34: Major KPIs of International Financial Business
｜ Major KPIs of International Financial Business Strategic Business LINE BK (Thailand) – Loan Balance LINE Bank (Taiwan) – No. of Users YoY +18.2% YoY 1.9X Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 33
Slide 35: Status of Global NFT Platform DOSI
｜ Status of Global NFT Platform “DOSI” Strategic Business • After launch of DOSI beta version, users of LINE Blockchain-powered wallet exceeded 1 million1. • Steady increase in number of transactions, ranking 2nd in concluded transactions2 for decentralized applications. Cumulative No. of Wallet Use
Slide 36: LINE NFT Business Service Map
｜ LINE NFT Business Service Map Strategic Business • Spread of blockchains as crypto-assets, has rapidly expanded NFTs into all industries including digital content, gaming items, and the field of metaverse. Issue Trade/Manage Use/Reproduce Crypto-asset Issuer Crypto-asset Exchange Metaverse Crypto-
Slide 37: Business Results (P/L): Strategic Business
Business Results (P/L): Strategic Business Strategic Business (JPY Million) FY2021 Q31 FY2022 Q31 YoY Revenue 26,668 65,173 +144.4% Fintech 26,088 64,868 +146.6% PayPay² - 33,809 N/A PayPay Card2 13,618 16,629 +22.1% PayPay Bank2 8,548 10,437 +26.1% Other fintech (LINE Fintech, etc.) 4,191 3,991 -4.
Slide 38: PayPay Corporation – Business Results
PayPay Corporation – Business Results Strategic Business Revenue1/EBITDA2 Statement of Financial Position (JGAAP)3 (JPY B) (JPY B) 36.6 FY2022 Q2 FY2022 Q3 Difference 29.3 Assets 697.3 1,057.3 +360.0 23.9 Cash and deposits 397.3 470.4 +73.0 19.1 Accounts receivable-other 106.7 333.7 +227.0 15.1 Prop
Slide 39: PayPay Card Corporation – Business Results
PayPay Card Corporation – Business Results Strategic Business Revenue/Operating Income (Non-Consolidated IFRS)1 Statement of Financial Position (JGAAP)1 (JPY B) (JPY B) 16.6 FY2022 FY2022 Difference Q2 Q3 13.9 14.1 Assets 839.1 976.4 +137.3 13.6 13.4 Cash and cash equivalents 63.1 203.4 +140.3 Trade
Slide 40: PayPay Bank Corporation – Business Results
PayPay Bank Corporation – Business Results Strategic Business Revenue/Operating Income (Non-Consolidated IFRS)1 Statement of Financial Position (JGAAP)1 (JPY B) (JPY B) 10.3 FY2022 FY2022 Difference Q2 Q3 9.3 8.6 8.7 Assets 1,604.9 1,736.9 +131.9 8.5 Cash and cash equivalents 332.3 446.0 +113.6 Trad
Slide 41: Major Services and Products of Strategic Business Segment
Major Services and Products of Strategic Business Segment Strategic Business Item Breakdown Fintech - - PayPay PayPay Card - PayPay Bank - PayPay Asset Management, PayPay Insurance, Magne-Max, Other fintech LINE Pay, LINE Securities, LINE Score, LINE Pocket Money, LINE BITMAX, LINE NFT, etc. Others
Slide 42: Business Structure of PayPay Card and PayPay Atobarai
Business Structure of PayPay Card and PayPay Atobarai Strategic Business Instrument Available at Credit Line Revolving/Installment Payment Main Revenue Sources Provided by Top-up & Pay Payment from PayPay merchants • Payment fee from PayPay PayPay app - - PayPay Balance (Online/offline) merchants Co
Slide 43: International Business
International Business
Slide 44: International Business Development
｜ International Business Development International Business • Overwhelming reach and market share in Asian countries and regions, mainly Taiwan, Thailand, and Indonesia. • Generating revenue mainly from advertising, stickers, and game businesses based on messaging. International Business Revenue5 Ta
Slide 45: Non-Financial Information
Non-Financial Information
Slide 46: New Remuneration Policy and Revision of Executive Remuneration Plan
Establishment of a New Remuneration Policy and Revision of Executive Remuneration Plan Non-Financial Information • The new executive remuneration plan from FY2022 onwards puts more emphasis on stock-based remuneration as a medium- to long-term incentive. • Fostering a sense of shared interest (Same
Slide 47: User Base
User Base Non-Financial Information Yahoo Japan - Number of Monthly Logged-in User IDs LINE - Monthly Active Users (Million) (Million) September 2022 Global MAU1：193 174 176 176 176 176 9 9 8 7 54.7 55.4 54.8 55.3 54.8 9 53 53 53 53 53 21 22 22 22 22 90 92 92 93 94 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'2
Slide 48: Materiality of Z Holdings Group (Materiality Evaluation Map)
Materiality of Z Holdings Group (Materiality Evaluation Map) Non-Financial Information Improve services through the use of data Ensure security as a social infrastructure Contribute to the healthy and safe development of the Internet society Secure safe telecommunications and Support the promotion o
Slide 49: Materiality of Z Holdings (Identified Materiality)
Materiality of Z Holdings (Identified Materiality) Non-Financial Information Business Providing new (WOW!) experiences foundation Customers using data/AI Operating safe & secure digital platforms Partners UPDATE THE National Building a resilient social infrastructure and local governments Reinforcin
Slide 50: 2030 Carbon Neutrality Declaration
2030 Carbon Neutrality Declaration1 Non-Financial Information • ZHD Group as a whole, aims to achieve carbon neutrality where greenhouse gas (GHG) emissions are reduced to net-zero by 2030. • Contribute to the realization of a sustainable society by encouraging carbon neutral initiatives both in and
Slide 51: Acknowledgment as a Sustainable Company
Acknowledgment as a Sustainable Company1 Non-Financial Information • Acknowledged by various evaluators. • Aim to maintain/enhance a high third-party evaluation after integration, to secure our position as the industry- leading ESG issuer. 1. As of 2022, Z Holdings Corporation received an MSCI ESG R
Slide 52: External ESG Evaluations
External ESG Evaluations Non-Financial Information S&P Global – DJSI MSCI ESG Rating1 Approx. 330 companies selected Score rising every year since 2018 around the world Received Highest Rating: Named as DJSI World Index AAA constituent for three For two consecutive years, named to consecutive years
Slide 53: Integrated Report Portal
Integrated Report Portal Non-Financial Information • Financial/non-financial information useful for investment decisions are kept up to date Vision and Strategy Sustainability Value Creation Business Performance URL: (English) https://www.z-holdings.co.jp/integrated-report/en/ (Japanese) https://www
Slide 54: Disclaimer
Disclaimer Statements made at the meeting or included in the documents that are not historical facts are forward-looking statements about the future performance of Z Holdings Corporation (Company, Z Holdings, ZHD) and its consolidated subsidiaries and affiliates. The Company cautions you that a numb
Slide 55: Unleashing the infinite potential of all people, with the power of information technology
Unleashing the infinite potential of all people, with the power of information technology